Firstly, you have to look into how much interest is charged on the consolidation loan
(PRWEB) November 27, 2005
With an ever-growing number of people suffering with debt problems in the UK, many look towards debt consolidation as a way out of trouble, but The Debt Help Site is urging caution regarding this approach.
The total of personal debt in the UK adds up to approximately £1.4 trillion. Many of the people carrying this burden are doing so in the form of multiple debts, possessing more than one credit card plus personal loans, store cards, etc.
When these debts build up and it becomes difficult dealing with them all at once, the idea of debt consolidation - combining all the debts into one loan - can seem appealing, the logic being that one monthly payment is easier to deal with than several.
However, according to Terry Galvin, editor of The Debt Help Site, rather than solve the debt problem, debt consolidation often makes it worse.
"Firstly, you have to look into how much interest is charged on the consolidation loan," explains Galvin. "Quite often, once you do the sums, you find out that you're paying more overall than with all the separate debts.
"Secondly," he adds, "once someone consolidates into one debt, they can sometimes convince themselves that they've dealt with the problem when, at best, they're in exactly the same amount of debt as before.
"So what often happens is that the person uses debt consolidation as a green light to get into even more debt, with another credit card or loan, then another one. Soon they'll find themselves in a much more serious position than before."
Galvin stresses that those with debt problems should look at all the options before committing themselves.
He says: "Debt consolidation can work for some but often there is a more suitable course of action to take that the person in trouble wasn't even aware of. Sometimes, the solution is simpler than they might imagine, like basic economising.
"It is always advisable to take professional advice first."
For more information, see: http://www.debthelpsite.net